Low fees and fast order execution
Relevant and vibrant advisory and partnerships.
Lower ranks are better
Low fees and fast order execution
Relevant and vibrant advisory and partnerships.
The working product is still expected.
No clear road-map
Project contributors received a large portion of the total supply
In time people will flock to more decentralized solutions.
Serum has unique derivative products that will in time increase their demand as more traditional traders come into the space.
The exchange heavily depends on Solana’s blockchain performance and relies on its transaction throughput. If the network cannot perform to its capabilities, Serum exchange will be impacted negatively.
Only 6M tokens were sold in the public sale out of a total of 10B.
Technical Analysis by Kong Trading - 14/09/2020
SRM is one of the most hyped and attention-rich projects in this space. This also shows in the chart, which has recently endured a healthy retrace, after weeks of upwards momentum. Right now, the market structure is a combination between a wedge and an ascending triangle.
To read the full Technical Analysis from Kong Trading click here.
Serum is the world's first completely decentralized derivatives exchange with trustless cross-chain trading brought to you by Project Serum, in collaboration with a consortium of crypto trading and DeFi experts. While we built the Serum protocol, it is permissionless – we do not hold special power anymore. It is up to you, the crypto community, to use it as you will.
Decentralized exchanges and DeFi technology has experienced a boom. But the growing demand and increase in user base have brought to light some fundamental problems.
|Speed and cost have been the first apparent issues when it comes to DeFi. The fee cost is unclear in advance and can vary and go to several dollars per trade and get minutes to go through. In finance, that is very slow, expensive, and non-cost-effective, especially because centralized exchanges can meet these needs.|
|Centralization is the next major issue with what’s supposed to be Decentralized finance as almost every Defi project bottoms out at the centralized oracle or a counsel of token holders. Or even to the team of the protocol itself. This creates again a central point of failure exposed to exploitation.|
|Stablecoins have to be by nature centralized as they are tied to the physical dollar bill or its equivalent amount as the banks aren’t on the blockchain. The current solutions have been more or less decentralized from Tether to USDC to DAI, but there were always tradeoffs to be made.|
|Orderbooks are highly crucial for traders as they can reliably and trustworthy exchange their assets on automation and at the fixed price. Some of the current solutions like Uniswap and Kyber Network have eliminated this exchange mechanism, but this is only suitable for a market participant from the user bracket. For serious traders and investors having an orderbook is a must.|
|Finally, the lack of cross-chain support. Almost all of the DeFi projects are exclusively in the Ethereum ecosystem and only enable exchanging ETH and ETH based assets. There are some cross-chain solutions, but again they are not being decentralized enough as, in the end, rely on the centralized entity to provide truth.|
Project Serum is a fully-decentralized cryptocurrency derivatives exchange that operates on the Solana blockchain. While being fully-decentralized and built on Solana, it has a full working capacity of centralized exchanges with an order book and fast order execution. On the other hand, it supports cross-chain swaps, enabling you to exchange coins between chains in a trustless and permissionless way.
It’s ecosystem consists of seven ingredients:
1.) Serum token (SRM): A utility and governance token of the ecosystem benefits its holder with voting rights, discounted fees, and interest from fees generated by the platform usage.
2.) Cross-chain Support: Introducing smart contracts with collateral instead of nodes to perform the escrow service for exchanging coins from different chains.
3.) Order book: The order book is automated and on-chain with the option of sending a limit order, allowing users to submit specific orders.
4.) Ethereum and Solana integration: Solana is an interoperable blockchain with smart contracts and multiple settlement cycles per second at a low cost.
5.) Physical settlement for cross-chain contracts: Trading custom contracts allows the user to take on leveraged positions in any products that Serum has markets for – including cross-chain, physically settled contracts.
6.) SerumBTC: BTC tokenization with Serum contracts on Solana and Ethereum, creating another equivalent of interchangeable SerumBTC.
7.) SerumUSD: Stablecoin basked creation through the smart contract operation like in the case of Bitcoin, wrapping multiple stablecoins and creating an equivalent SerumUSD.
Having been built on Solana blockchain, the Serum DEX can provide higher speeds at the lower cost. This blockchain uses multiple settlement cycles per second and costs, which cost less than a penny to send a message–both orders.
In this way, the platform can have an orderbook, much like the traditional centralized counterparts. With an on-chain orderbook, traders can send limit orders with a specified amount, size, direction, and price like they are used to.
The next feature is the creation of custom contracts for users to trade. They enable users to take on leveraged positions and have physically settled cross-chain margin deposits in a fully decentralized way.
These contracts can also be tokenized and exchanged and moved across the blockchain. This is how SerumBTC and SerumUSD can be created. The first derivative represents the tokenization of Bitcoin through the creation of a perpetual contract.
Much like the futures contract, this one is created for expiration dates but is renewed each week in a series of contracts. Each contract creates a token dubbed by asset name and date of expiration ex. 1 BTC-2020-07-22. This token can be used as Solana token or an ERC20 that soon expires into 1 BTC.
Then the equivalent value SerumBTC token is created, which holds 1 BTC-2020-07-22 token in a smart contract. After each week, SerumBTC automatically transfers its holdings from that week's BTC in the upcoming one, ensuring that SerumBTC never expires but can be redeemed for an ERC20 or Solana token that itself soon expires into BTC.
SerumUSD is the stablecoin created through the same mechanisms as SerumBTC. Unlike in the previous use-case example of the custom contract utilization, the SerumUSD token represents the basket of stablecoins to come up with the optimal one that hedges others' volatility and creates a sort of an index and ensures an even stable price. This basket contains centralized stablecoins as well as decentralized but is itself a fully decentralized stablecoin. Also, besides hedging with diversification, it is redeemable in the median price from the basket.
Cross-chain swap problems in DeFi in exchanging, for example, BTC and ETH, are solved by smart contracts and collateral. Serum protocol takes a small ETH collateral from both participants in the exchange, and both of the assets are deposited into a smart contract. Failure to deposit your stake or if one o have been involved in some foul play results in your collateral being taken, and a small portion is given to the other party. If both parties receive their desired cryptos, the collateral is given back as deposited. The guarantee of trust is the smart contract in which the asset deposit has been made. The blockchain history can be used for a review in case of a dispute.
Serum is a platform for cryptocurrency traders wanting to trade spot and derivative financial products and use leverage in a fully decentralized way without any downsides. Compared to the traditional centralized exchanges, which have fast order executions, liquid markets, and orderbooks current products aren't meeting professionals' standards.
The needs of having more control over managing positions, reliability of trades, non-varying fees, leverage, and trading custom contracts are met by building the platform on Solana. It can process more than 50,000 transactions per second with low cost and enables Serum with an on-chain central limit order book (CLOB) that updates every 400 milliseconds. This ensures that the Serum exchange operates with the lowest latency and gas costs.
The way users can also participate is through the SRM token by governing the exchange decisions regarding the fees and other vital parameters.
SRM is the platform’s native utility token. As such, its purpose is to drive and incentivize users to participate on the platform. It is used to pay the fees but also participates in its governance and decision making.
The token offers its holders up to 50% discount on fees for which its mainly used with 100% of net fees going to a burn. Locking together 1,000,000 SRM, you receive 1 MSRM (MegaSerum) that is fully redeemable to get an extra 10% discount and slightly more voting rights in the on-chain- governance.
The serum ecosystem is immutable, but certain parameters have to be adjustable, such as fees and contracts. Thus voting with SRM is needed to ensure the adaptability to further needs and conditions.
And lastly, you can stake the tokens to create a node and receive rewards based on the node’s performance. 10.000.000 SRM is needed to run a node with at least 1 MegaSerum in it. Nodes validate cross-chain settlements as well as supply blockchain histories for doing so.
The exchange has officially launched on August 30, 2020. As reported by the project lead Sam Bankman-Fried at the time of writing, the exchange should still needs work on GUI (graphical user interface).
On the recent online panel, he demonstrated the exchange on the testnet. The latency was low, processing orders in a second, and the transaction cost for processing orders (fees) were no more than $0.001. Sam Bankman-Fried added that the platform can handle hundreds of orders per second per market but that the team aims to push it even further and achieve a 400 ms latency.
Although the most crucial part was covered, we are yet to see how the custom contracts are created and the associated tokens and how cross-chain swaps work.
As a decentralized exchange, Serum’s immediate competition are other decentralized exchanges.
The team behind project Serum comes from diverse backgrounds and are experts in the field of cryptocurrencies, trading, and decentralized finance. Serum's team is the same team working around the FTX crypto derivatives exchange. The project lead is Sam Bankman-Fried, the CEO of FTX Exchange and the lead quant trading firm Alameda research that manages around 30% of the market trading volume.
Advisors to the Project Serum are relevant to market professionals that have built similar things and are experts in their field.
Full list of advisors.
Calvin Liu - Strategy Lead, Compound | Sebastian Conybeare - Software Engineer, Alameda Research | Gary Wang - CTO, FTX | Dan Friedberg - Fenwick & West | Clement Ip - Partner, Genesis Block | Dan Matuszewski - Principal and co-founder, CMS | Shane Molidor - Head of Business Development at BitMax | Santiago Roel Santos - Partner, ParaFi |
A total of 10.000.000.000 (10B) are minted and locked away with only 10% initial in the circulating supply and will grow to 15% per year. Those that are locked are there for up to 7 years. Out of that, 10% unlocked, mostly for ecosystem incentives, only 175.000.000 were intended to be brought into circulation.
But after the DeFi community provided some feedback, it was decided to withhold the larger portion and release it overtime if necessary to provide liquidity.
In total, only 50.000.000 SRM tokens were released in circulation - 6m for the sale and 44m allocated to the project contributors. The other 125m went back to the reserve for future use.
The sale was conducted on the 7th of August between 13:00 and 15:00 UTC on two exchanges, FTX and Bitmax. Each was allocated 3.000.000 SRM, and an auction-based round begun with the highest price set at $0.11 per token. The sale's goal was only $660.000, which is why all of the 6m tokes were sold.
A pre-sale was conducted prior, in which a total of 4% of the supply was sold. At the price of $80.000 per MSRM, the total funds raised comes to around $20.000.000.
90% of all tokens are locked up from the very start. With the rest from pre-sale, contributor tokens, and those that got back from circulation and into reserves, they add to 91.25% locked.
The unlocking and releasing dynamic is best depicted below, but the basics are that they are all locked for the first year, after which they are linearly released in the next six years at the rate of 1/2190 per day.
General crypto trader
As a cryptocurrency exchange, Serum aims to enter the most prominent digital assets case: trading and investing. Most of the current capital and trading volume consists of a speculative one and is highly disproportionate to the actual users.
This is a fully decentralized financial solution, e.i a DeFi project. It will pull eyes on itself from the $7.07B market and take its share. Especially with apparent advantages like faster order settlements, orderbook, and low fees and indicated interest for these solutions.
As a derivatives exchange, it accommodates the needs of seasoned trading professionals that want to trade with more complex and custom financial products while taking leveraged positions. The number of these types of traders will only increase in time as they start to enter from traditional markets.
Project Serum has a long list of strategic partners that are high ranking in the industry. The list consists of 26 other companies. Here is a short list of partners.
The team-member are often invited on podcasts and give interviews for other channels. Also, they have their own presence through the FTX social media channels and have positioned themselves as authorities and leaders in quant trading. Project Serum has also received a lot of endorsement from Solana and other strategic partners, which provided further exposure.
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